EVALUATION OF CORPORATE GOVERNANCE ON ORGANIZATIONAL PERFORMANCE: CASE OF NSSF UGANDA HEADOFFICE FELIX MMATA MULANDA A RESEARCH PROPOSAL SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF MASTER OF ARTS DEGREE IN GOVERNANCE AND ETHICS OF MOUNT KENYA UNIVERSITY MARCH 2024 ii DECLARATION This research proposal is my original work and has not been presented for a degree in any other University or for any other award. Signature: …………………………… Date: …………………………. FELIX MMATA MULANDA MGE/22215/2018 I confirm that the work reported in this proposal was carried out by the candidate under my supervision. Signature: ………………………………………. Date: ……………. DR. KARURI THIONGO MOUNT KENYA UNIVERSITY iii DEDICATION This work is dedicated to my wife Faith, my son Ray, my mother Rose, and my late dad George. iv ACKNOWLEDGMENTS I express my heartfelt appreciation to Dr. Karuri Thiongo, my dedicated supervisor, whose unwavering support significantly enriched every phase of the research process. A special note of gratitude extends to Mr. Walem Yegon Suswa for his multifaceted assistance in various aspects of this research. I extend my sincere wishes for God's blessings upon his future endeavors. My deepest appreciation is reserved for my pillar of strength, my wife, and confidante, Faith Nashipai Mmata, whose unwavering support was invaluable. To my son and little companion, Ray Rei Mmata, I express gratitude for his understanding, even at his tender age, of the importance of Daddy's commitment to this study. This research is dedicated to both of you. I extend heartfelt thanks to my mother, Rose Chepkurui Ngetich Mmata, for her enduring belief and encouragement, not just during this academic pursuit but throughout my life. In memoriam, my deepest gratitude goes to my late father, George Mmata Mulanda. Their collective influence has been instrumental in this academic journey, and I am forever grateful for their unwavering support and inspiration. v ABSTRACT Corporate Governance plays a pivotal role in shaping the performance trajectory of organizations. This study delves into the intricate interplay between corporate governance elements and the overall performance of the National Social Security Fund (NSSF) in Uganda, focusing on the period from 2013 to 2020. By leveraging insights from Agency Theory and Modern Portfolio Theory and the Upper Echelons Theory, the research seeks to explore how transparency, accountability, equity, and board composition impact organizational performance. The Agency Theory defined as an interdependence or relationship between the principals and the agents. This relationship was viewed as a contract between the agent and the principal. The Modern Portfolio Theory (MPT) which refers to an investment theory that allows investors to assemble an asset portfolio that maximizes expected return for a given level of risk. Upper Echelons Theory (UET) opines that managerial characteristics such as tenure, age, education, functional background, financial position, and socioeconomic roots affect the outcomes of organizations. Indeed, the landscape of corporate governance has evolved into a critical determinant of organizational success, with various components influencing the decision-making processes and strategic trajectories of entities. This research centers its investigation on the National Social Security Fund (NSSF) in Uganda, scrutinizing the dynamic relationship between corporate governance practices and the fund's performance during the eight-year span from 2013 to 2020. The study adopts a descriptive research design, aiming to provide a comprehensive understanding of the subject matter. The research scope encompasses the entire staff complement of NSSF Uganda, involving directors, managers, and staff members. The data collection process utilizes Microsoft Excel VBA for effective organization and analysis. Employing a mixed-methodology approach, the study amalgamates qualitative insights garnered from questionnaires with quantitative data analysis, ensuring a robust and objective assessment. The analysis reveals significant correlations between transparency, accountability, equity, and board composition, illuminating their collective influence on the organizational performance of NSSF Uganda. These correlations are identified as substantial predictors of the Fund's success, emphasizing the interdependence of these governance elements. The findings of this research transcend theoretical discourse and extend into the realm of practical applications, particularly for stakeholders in the pension sector. The study advocates for the strategic alignment of organizational strategies with the identified relationships between transparency, accountability, equity, and board composition. This alignment is posited to optimize organizational performance, fostering sustained success and enhancing stakeholder vi confidence in the pension sector. Beyond its practical implications, this research significantly contributes to the academic discourse surrounding corporate governance and organizational performance. It adds nuanced insights to the existing body of knowledge, offering a deeper understanding of how specific governance elements impact organizational outcomes. The study recommends the development and implementation of robust corporate governance structures within organizations, emphasizing transparency, accountability, equity, and the composition of a well-structured board. These elements are identified as crucial enablers of good governance practices, poised to elevate organizational performance. In conclusion, the research affirms the integral role of transparency, accountability, equity, and board composition in effective corporate governance, positioning them as positive determinants of organizational performance. The implications of these findings extend beyond NSSF Uganda, providing valuable insights for organizations seeking to fortify their governance frameworks and drive sustained success. This comprehensive analysis lays a foundation for future research endeavors and informs strategic decision-making processes within the realm of corporate governance. vii TABLE OF CONTENTS DECLARATION .................................................................................................................................... ii DEDICATION ....................................................................................................................................... iii ACKNOWLEDGMENTS ...................................................................................................................... iv ABSTRACT ............................................................................................................................................. v CHAPTER ONE: INTRODUCTION .................................................................................................... 13 1.1 Background of the Study...................................................................................................................... 13 1.2 Statement of the problem ....................................................................................................................... 4 1.3 Purpose of the study ............................................................................................................................... 5 1.4 Objectives of the study ........................................................................................................................... 5 1.5 Research questions ................................................................................................................................. 5 1.6 Significance of the study ........................................................................................................................ 5 1.7 Scope of the study .................................................................................................................................. 6 1.8 Study limitations .................................................................................................................................... 6 1.9 Assumptions of the study ....................................................................................................................... 7 1.10 Operational definition of key terms ....................................................................................................... 8 CHAPTER TWO: LITERATURE REVIEW ........................................................................................ 10 2.1 Introduction .......................................................................................................................................... 10 2.2 Empirical literature review (and research gaps) ................................................................................... 10 2.3 Theoretical Literature ........................................................................................................................... 20 2.4 Conceptual Framework ........................................................................................................................ 26 2.5 Recap of literature review .................................................................................................................... 31 CHAPTER THREE: RESEARCH METHODOLOGY ......................................................................... 33 3.1 Introduction .......................................................................................................................................... 33 3.2 Research methodology ......................................................................................................................... 33 3.3 Research design ................................................................................................................................... 33 3.4 Locations of the study .......................................................................................................................... 34 3.5 Target population ................................................................................................................................. 34 3.6 Sampling procedures and techniques ................................................................................................... 34 3.7 Sample population ............................................................................................................................... 36 3.8 Construction of research instruments ................................................................................................... 36 3.9 Testing for validity and reliability ........................................................................................................ 36 3.10 Data collection methods and procedures .............................................................................................. 37 3.11 Data analysis techniques and procedures. ............................................................................................ 38 3.12 Ethical considerations .......................................................................................................................... 39 CHAPTER FOUR: RESEARCH FINDINGS, ANALYSIS AND PRESENTATION ......................... 40 4.1 Introduction .......................................................................................................................................... 40 4.2 Research presentation, interpretation, and discussions ........................................................................ 40 viii 4.3 Findings ............................................................................................................................................... 43 4.4 Corporate Governance ......................................................................................................................... 71 4.5 Conclusion ........................................................................................................................................... 40 4.6 Research gaps....................................................................................................................................... 40 CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS .............................. 70 5.1 Introduction .......................................................................................................................................... 70 5.2 Research summary ............................................................................................................................... 70 5.3 Conclusion ........................................................................................................................................... 73 5.4 Recommendations ................................................................................................................................ 74 LIST OF REFERENCES ....................................................................................................................... 80 APPENDIX I: QUESTIONNAIRE FOR PERSONNEL AT NSSF UGANDA .................................... 86 APPENDIX III: BUDGET ..................................................................................................................... 91 APPENDIX IV: WORK PLAN ............................................................................................................. 91 APPENDIX V: Data collection plan ...................................................................................................... 92 ix LIST OF TABLES Table 1: Summary of performance reviews - NSSF Annual report 2020. ............................................. 24 Table 2. Summary of staff at NSSF Uganda .......................................................................................... 30 x LIST OF FIGURES Figure 1.Illustration of the Modern Portfolio Theory, Harry Markowitz (1952). .................................. 24 Figure 2. Illustration of the Upper Echelons Theory. Hambrick and Mason (1984). ............................ 24 Figure 3. Conceptual Framework Illustrating the Relationship between Corporate Governance and Organizational Performance. .................................................................................................................. 30 Figure 4: Gender distribution based on primary data (2022) …………………………………………34. Figure 5: Gender distribution based on secondary data (2020) ………………………………...…….35. Figure 6: Age distribution based on primary data (2022) …………………………………………….35. Figure 7: Tenure of employment based on primary data (2022) ………………………………...…...36. Figure 8: Level of education based on primary data (2022) …………………………………..……...36. xi LIST OF ABBREVIATIONS AND ACRONYMS AGM Annual General Meeting ASX Australian Stock Exchange BSC Balanced Scorecard CAC 40 Cotation Assistée en Continu 40 (French Stock Market Index 40) CEO Chief Executive Officer CIR Cost to Income Ratio CSAT Customer Satisfaction Rate CSR Corporate Social Responsibility DAX 30 Deutscher Aktienindex 30 (German Stock Index 30) EFQM European Foundation for Quality Management ESG Environmental, Social, Governance FTSE IN Financial Times Stock Exchange Index IPMS Integrated Performance Measurement System NSSF National Social Security Fund PMM Performance Measurement Matrix PP Performance Prism PPS Performance Pyramid System R&D Research and Development RDF Results and Determinants Framework RDT Resource Dependence Theory ROA Return on Assets ROAI Return on Average Investment ROE Return on Equity xii SEC Securities and Exchange Commission SPSS Statistical Package for Social Sciences TMT Top Management Team UGX Uganda Shillings UET Upper Echelons Theory UNCST Uganda National Council for Science and Technology 1 CHAPTER ONE: INTRODUCTION 1.1 Background of the Study Poor management of companies leads to poor company performance and ultimately their collapse. In the recent past, there have been scandals that have rocked reputable firms and led to their failure across the globe. Some of these companies include Enron, Parmalat Finanziaria, China Aviation Oil, Chase Fund and WorldCom, among others. Some of the reasons for failure include ineffective boards, board interference, internal control failures, poor strategies, greed, and lust for power, too much expansion and ill-advised acquisitions, dominant CEOs, deficiency of oversight functions, negligent shareholders, and poor financial disclosures, among others. These issues are mitigated by the existence and enforcement of legal and regulatory frameworks. However, if institutions are weak, the enforcement of such frameworks becomes difficult. Therefore, good frameworks include both an institutional framework for policy implementation and a set of policies. Enforcement of good frameworks influences external financing of firms and affects valuation of the shares of affected listed firms (OECD, 2011). Assessing the topic from a Global, International, Regional, National and local perspectives of the topic and its variables, the researcher noted as a result of the last decade crisis in the OECD countries, the losses of pension funds are estimated to be $5.4 trillion or about 20% of the value of assets in 2008 (Antolín and Stewart, 2009). Consequently, a significant number of countries policy makers are again paying attention to how private pension funds are managed (Rudolph et al., 2010) and taking into consideration different reforms that may dramatically change the pension system in some countries at a global level. From a regional perspective, Corporate governance has implications for economic development, especially in helping to increase the flow of financial capital to firms in developing countries. This is quite important for policy makers in Africa who are concerned with attaining high long-term growth rates of about 7 percent per annum within the framework of the New Partnership for Africa’s Development. (Charles C. Okeahalam and Oludele A. Akinboade, 2003). More closely, ahead of the onset of the COVID-19 crisis, local pension sectors had been growing rapidly across the African region since the late 2000s. (“How the COVID-19 crisis is 2 impacting African pension fund ... - IFC”) Further development and appropriate regulation of pension funds with longer-term investment horizons could enable the institutions to become important sources of local finance for infrastructure and other longer-term socioeconomic development needs. (Jacqueline Irving and IFC, 2020). More closely at a National level, Uganda is considered as a country with an entrepreneurial culture. However, there is an alarming rate of business failure especially for organizations which rarely achieve their full potential. The reason behind this trend is poor financial disclosures, ambiguous structure of business ownership, and lack of transparency (Wakaisuka- Isingoma, Aduda, Wainaina & Mwangi, 2016). There is thus a need for good corporate governance practices to reduce failure rates of businesses. Khan (2011) defines corporate governance as “broad term that describes the processes, customs, policies, laws and institutions that directs the organizations and corporations in the way they act, administer, and control their operations” (p. 1). He explains further that corporate governance involves formulating and implementing frameworks that reduce the principal – agent problem. It’s assessed in terms of key principles noted as: transparency, accountability, equity, and composition of the governing body. The principal – agent problem arises when the shareholders’ interests’ conflict with the managers’ interests. It leads to issues that are associated with better asset control in the interests of stakeholders. With poor corporate governance, managers get more benefits at the expense of the firm which ultimately leads to poor performance. It is argued that companies therefore require good corporate governance to grow and survive in the long term. Good corporate governance is anchored in transparency, accountability, equity, composition of boards & management and responsibility. This ensures that corporate objectives are achieved through sufficient disclosures and making decisions effectively, company transactions are transparent, the company complies with the legal and statutory obligations, the interests of shareholders are protected, and the values and business ethics are upheld. Several factors compel organizations to abide by a set of good governance principles. These include alert customers, smart and vigilant investment community, awareness in companies to be exemplary corporate citizens, and stern regulations (du Plessis, Hargovan & Bagaric, 2011). The following are the reasons why companies should exhibit good corporate governance (OECD, 2011): Investors and markets notice well-governed companies and respond positively 3 towards them, companies need to access investor capital and attract the best workers from all over the world, and well-governed organizations boosts the confidence of investors and help in securing more capital in the long term. The study sought to explore corporate governance in NSSF Uganda and how it affected organizational performance. NSSF Uganda was established by an act of parliament to protect employees from social and economic uncertainties in life. Its formation is stated under Cap 222, section 2, (The National Social Security Fund Act, 1985). There is established a fund to be known as the National Social Security Fund, into which there shall be paid all contributions and all other payments made in accordance with this Act and out of which there shall be paid all benefits and other payments required by this Act. (p. 3). As of 2020, NSSF Uganda had 18 branches, four sub-branches, 23 outreach centers, 566 dedicated staff, 54,700 registered employers, 2.1 million registered members, total contributions of UGX 1.2 trillion, total revenue of UGX 1.471 trillion, 1.28 % cost of administration, total asset value of UGX 11.3 trillion, turnaround time of 7 days, and UGX 496 billion benefits paid out to members (NSSF Uganda, 2020). Jenatabadi (2015) defines organizational performance as “the nature and quality of an action performed in a company to achieve the accomplishment in its primary functions and tasks to produce profit” (p. 2). (“The Effects of Effective Communication on Organizational Performance ...”) He further explains this by stating that performance can be seen as the output of organizational effort that is measured against expected outputs or objectives. Every company tries to achieve desired objectives by using resources readily available. Elena-Iuliana and Maria (2016) argue that performance is not only the meeting of an outcome, but also the comparison between the outcome and set objectives. Organizational performance is indicated by various methods of performance measurement. Performance measurement is the quantitative method or numerical indicator of how well organizational objectives have been met. This requires in-depth analyses of both qualitative and quantitative data of the performance parameters, with a defined frequency for analyses (Felizardo, Félix & Thomaz, 2017). Most performance measures are usually based on costs and financial measures. The most used financial measures are Return on Equity (ROE), Return on Assets (ROA), and profit margins. Several models exist that can be used to measure performance. These include The Performance Measurement Matrix (PMM), Results and Determinants Framework (RDF), The Performance Pyramid System (PPS), Balanced 4 Scorecard (BSC), Integrated Performance Measurement System (IPMS), European Foundation for Quality Management (EFQM), and The Performance Prism (PP) (Felizardo, Félix & Thomaz, 2017). The company of focus for this study is National Social Security Fund Uganda (NSSF Uganda). Key indicators of performance are customer satisfaction, profitability, growth, and productivity. 1.2 Statement of the problem NSSF Uganda embarked on a strategic journey in 2015 with the formulation of a 10-year plan aimed at achieving specific milestones by 2025. Central to this strategy was the ambitious target of attaining a UGX 20 trillion asset size by 2025, necessitating an annual growth of UGX 1.6 trillion through a dynamic approach involving cost management, enhanced investment returns, and increased collections (NSSF Uganda, 2016). Simultaneously, the fund set stringent operational benchmarks, notably reducing the turnaround time for processing benefits from 7 days in 2020 to a single day by 2025 (NSSF Uganda, 2017). As of 2020, the financial reports indicated commendable progress, with an average asset growth of UGX 1.2 trillion and a benefits payout timeframe meeting the set target of 7 days. Despite these achievements, the fund still aspires to meet its projected total assets of UGX 13.7 trillion by 2025, maintaining high customer and staff satisfaction levels. This apparent success and strategic alignment with the 10-year plan prompt a critical examination of the underlying factors contributing to NSSF Uganda's positive performance trajectory. The transparency testament provided by NSSF in 2020 underscores the Fund's robust performance across key dimensions, including asset growth, customer satisfaction, benefits payout efficiency, and staff contentment. However, the role of corporate governance in steering and sustaining these achievements remains an area that requires explicit investigation. The researcher contends that corporate governance principles, encompassing transparency, accountability, equity, and board composition, exert a direct and positive influence on organizational performance. The study objectives and questions have been meticulously formulated to delve into this correlation, aiming to unravel how corporate governance practices contribute to the realization of set targets within the strategic plan. Hence, the research seeks to address the existing gap by investigating and establishing the relationship between corporate governance and the effective attainment of strategic goals at NSSF Uganda. 5 1.3 Purpose of the study The purpose of this study is to evaluate corporate governance on organizational performance of NSSF Uganda. 1.4 Objectives of the study The following were the objectives of the study: (i) To analyse the effects of transparency on organizational performance of NSSF Uganda. (ii) To assess the effects of accountability on organizational performance of NSSF Uganda. (iii) To evaluate the effects of equity on organizational performance of NSSF Uganda. (iv) To explore the effects of board composition on organizational performance of NSSF Uganda. 1.5 Research questions The following are the questions that the study aims to answer: (i) What is the relationship between transparency and organizational performance at NSSF Uganda? (ii) What is the relationship between accountability and organizational performance at NSSF Uganda? (iii) What is the relationship between equity and organizational performance at NSSF Uganda? (iv) What is the relationship between board composition and organizational performance at NSSF Uganda? 1.6 Significance of the study In this age and time not, much research has been conducted on the effects of corporate governance on organizational performance in the pension sector, more specifically in the pension sector in Africa. The findings of the study will therefore shed light on how corporate governance affects organizational performance at NSSF Uganda and thus be an important tool for informing practices at the organization and in other pension sector players across the continent. The study findings will also add to the existing body of knowledge on corporate 6 governance and organizational performance. It will improve existing literature on the sector for future research especially the tenenets of corporate governance sited and their relationship with positive (or negative) organizational performance. 1.7 Scope of the study The study assessed the correlation between corporate governance and organizational performance at NSSF Uganda within a defined geographical scope. Organizational performance, encompassing customer satisfaction, profitability, growth, and productivity metrics, was analyzed through customer satisfaction rates, ROAI, Expense to Asset Ratio, Return on Members’ Funds, and CIR. Corporate governance factors, including transparency, accountability, equity, and board composition, were examined to understand their relationship with organizational performance variables. The research had a temporal focus spanning a 5- year period from 2013 to 2017, providing a comprehensive timeframe for evaluating the impact of corporate governance on organizational performance. The findings aim to guide policy enhancements in corporate governance practices at NSSF Uganda and inform broader organizational policies in the Pension sector. 1.8 Study limitations The research study acknowledged certain limitations and has taken measures to address them. I. The research study acknowledges certain limitations, primarily stemming from the unavailability of information on specific performance indicators such as return on average assets, total capital adequacy ratio, regulatory earnings per share, and return on average equity in the NSSF Uganda annual reports. To address this, the study strategically focuses on alternative performance indicators like ROAI, expense to asset ratio, return on members' funds, and cost to income ratio, which are readily available in the annual reports. II. Another identified limitation pertains to potential challenges in accessing data or individuals due to the quasi-governmental nature of the organization under study. Despite this potential restriction, the researcher is committed to navigating any challenges effectively, ensuring that the study is conducted to the best of their abilities, and seeking alternative avenues for obtaining necessary information. 7 III. Considering the COVID Pandemic affecting organizations then , a third limitation involves the impracticality of conducting physical interviews. To circumvent this challenge, the researcher opted for online sessions for data collection, prioritizing the safety and well-being of all involved parties. By proactively acknowledging and addressing these limitations, the research study aims to provide valuable insights and contribute meaningfully to understanding organizational performance within the context of NSSF Uganda. 1.9 Assumptions of the study The researcher had initially assumed the availability, receptiveness, and accommodation of all respondents at NSSF Uganda to the study. Moreover, the assumption was made that the corporate governance tenets outlined in the objectives, namely transparency, accountability, equity, and balanced composition, would exert a positive influence on organizational performance. However, the research findings were subsequently employed to critically examine and validate these initial assumptions. 8 1.10 Operational definition of key terms Explains how certain terms have been used in a special way in the context of the research. Turnaround Time: In the context of this research, Turnaround Time specifically refers to the duration taken to process a pension claim within the administrative framework of Uganda. It encompasses the entire cycle from the initiation of a pension claim to its completion, reflecting the efficiency and timeliness in handling these crucial financial transactions. Corporate Governance: A comprehensive term denoting the intricate processes, customs, policies, laws, and institutions that guide the actions, administration, and control of organizations and corporations. This multifaceted concept is evaluated based on key principles, namely transparency, accountability, equity, and board composition. Transparency denotes openness, allowing stakeholders insight into meetings, budgets, and decisions to prevent corruption. Accountability involves taking responsibility for decisions affecting stakeholders, while equity emphasizes fairness and impartiality. Board composition pertains to the elected governing body, responsible for overseeing and safeguarding the interests of the incorporated firm. Organizational Performance: The nature and quality of actions executed within a company to achieve success in its primary functions and tasks, ultimately leading to profit. For the purpose of this study, organizational performance is assessed through various metrics, including Customer Satisfaction Rate, Return on Average Investment, Expense to Asset Ratio, Return on Members’ Funds, Cost to Income Ratio, Asset Size, and Turnaround Time. These metrics collectively provide a comprehensive understanding of an organization's effectiveness and efficiency in fulfilling its objectives. Transparency: In the research context, transparency is defined as openness within an organization, facilitating accountability and combating fraud or corruption. An organization is considered transparent when its meetings are accessible to stakeholders, budgets are open for review, and decisions are subject to discussion, fostering a culture of openness and integrity. Accountability: Accountability is articulated as the act of taking responsibility for one's actions. In the organizational realm, it involves acknowledging responsibility for decisions and laws affecting stakeholders. This term also acknowledges that accountability may sometimes necessitate admitting mistakes as part of the responsible governance of an organization. 9 Equity: The term equity, within the framework of this research, denotes the quality of being fair and impartial. Recognizing the growing importance of equity in organizational development, it underscores the need for fair and unbiased practices to foster an inclusive and just work environment. Board Composition: Referring to the members constituting the governing body or board of an incorporated firm, board composition is critical to organizational governance. These members, commonly elected by stockholders, hold the responsibility of governing the firm and safeguarding the interests of its stakeholders. Customer Satisfaction: Customer Satisfaction is defined as a metric that measures how well the products and services provided by an organization meet or exceed customer expectations. This assessment provides valuable insights into the effectiveness of an organization in meeting the needs and expectations of its clientele. Profitability: Profitability is articulated as the degree to which a business or activity yields financial gain. It is a measure of the overall financial success of an organization, indicating its ability to generate profit from its operations. Growth: Growth, in the organizational context, signifies the process of increasing in size. Economic growth, specifically, pertains to the increase in the inflation-adjusted market value of goods and services produced by an economy over time. Productivity: Productivity is defined as the effectiveness of productive effort, especially in industry, measured in terms of the rate of output per unit of input. This term encompasses the efficiency and output of an organization's resources in achieving its objectives. 10 CHAPTER TWO: LITERATURE REVIEW 2.1 Introduction This section aimed to conceptualize the study within the bounds of existing knowledge. It covers the following areas: theoretical literature, empirical literature review, corporate governance, organizational performance, conceptual framework, and recap of the literature review. 2.2 Empirical literature review (and research gaps) Numerous inquiries have delved into the influence of corporate governance on organizational performance. For instance, Matama (2012) explored the role of corporate governance in enhancing the financial performance of selected financial services organizations in Uganda, underscoring the pivotal impact of transparency and trust on overall financial performance. Boyd and S. Gove (2017) discussed global corporate governance challenges, emphasizing the need to address these issues. Campbell K and A. Mínguez-Vera (2008) provided insights on gender diversity in the boardroom and its correlation with firm financial performance. In Africa, Godfried Asamoah (2013) investigated the role of corporate governance mechanisms in maximizing shareholder value among banks listed on the Ghana Stock Exchange, highlighting the lack of a clearly established nexus between corporate governance and organizational performance in Ghana. Closer to the study's location, Ojok (2012) explored the impact of corporate governance on organizational performance within selected non- governmental organizations (NGOs) in Northern Uganda. The study revealed that financial transparency, accountability, and board composition significantly predicted organizational performance, emphasizing the importance of accurate information provision and stakeholder participation. Despite these valuable contributions, there is a noticeable gap in the literature regarding the relationship between corporate governance and organizational performance within Uganda's pension sector. This research deficiency underscores the need for a focused examination, particularly within the context of the National Social Security Fund (NSSF), a dominant player in Uganda's pension sector. Such an investigation is not only relevant but also crucial for providing insights that can inform future policy decisions within the sector. The effect is measured through organizational performance that is reviewed under seven parameters in the study objectives: 11 2.2.1 Transparency Transparency in an organization is positively related to performance. Investors spend more on the shares of a transparent company as compared to companies with a similar financial performance but poor transparency (UNCTAD, 2003). Aydamir (2012) states that information affects investors outside the organization who must decide under what risk to place their money. A good disclosure regime underpins confidence in the stock market and influences the behavior of companies to safeguard the rights of investors (OECD, 2011). Transparency and disclosure also enhance stock market liquidity. Aydamir (2012) opines that timely and reliable information increases confidence within decision-making authorities in an organization. It enables decision- makers to make sound business decisions that impact positively on growth and profitability. In emerging markets, transparency is the most important reform for corporations. Companies should therefore improve disclosure of information to boost investor confidence. Transparency improves corporate reputation. Veldman, Gregor and Morrow (2016) state that corporate reputation is improved by disclosure of accurate executive pay. They argue that linking average, median, and minimum pay in an organization to executive pay aids in limiting inequality. It contributes to trust-building and loyalty among stakeholders of the organization. Remuneration within an organization should be made public and the employees should be given the opportunity to express their opinions on executive compensation. Transparency helps to mitigate ‘hidden control’. Veldman, Gregor, and Morrow (2016) argue that disclosure about the engagement of investors in corporation’s aids in understanding the role and influence of investors. Raut (2014) explains that such disclosure sheds light on the intentions of the institutional investors both within and without the company. Therefore, issues such as hostile takeovers and block holder exit are avoided. Organizations should therefore clarify and make known publicly the roles and responsibilities of the board and management, and the extent of influence that major shareholders have on decision-making. Indeed, transparency is integral to corporate governance, higher transparency reduces the information asymmetry between a firm’s management and financial stakeholder’s, mitigating the agency problem in corporate governance (Barbu, 2005). The transparency of regulated organizations includes public information on regulations and on safety net operations of the regulators (Brown and Caylor, 2004). For instance, most specifically in the banking sector, weak transparency makes banks’ asset risks opaque. Stock market participants including 12 professional analysts such as Moody’s encounter difficulties in measuring banks credit worthiness and risk exposures (Chiang, 2005). Rogers (2006) argues that timely incorporation of economic losses in the published financial statements increases the effectiveness of corporate governance, compensation systems, and debt agreements in motivating and monitoring managers. For instance, improved governance can manifest in a reduction of the private benefits that managers can extract from the company or in a reduction of the legal and auditing costs that shareholders must bear to prevent managerial opportunism (Abor and Biekpe, 2007). Governance literature and studies in process and accounting exploits the role of accounting information as a source of credible information variables that support the existence of enforceable contracts, such as compensation contracts with payoffs to managers contingent on realized measures of performance, the monitoring of managers by boards of directors and outside investors and regulators, and the exercise of investor rights granted by existing securities laws (Barbu, 2005). There are several issues to consider in this regard. Brown (2004) affirms that transparency is key to corporate governance, in essence transparency reduces the information asymmetry between a firm’s management and financial stakeholder’s, mitigating the agency problem in corporate governance. Today, after many scandals and financial crises, transparency in corporate governance is the debate du jour. Trust and transparency are considered the new tools of trade for players in the corporate market and public sector. Transparency lies at the intersection between the public’s right to know and corporation’s right to privacy. The public’s right to know means the stakeholders’ interest in obtaining corporation information about management and strategy. According to Leblanc and Gillies (2005), stakeholders includes staff, staff unions, regulators, and governments at various levels, customers, third party vendors, financial institutions, various non-governmental corporations with broad or narrow agendas. The public has a legitimate claim to know or be facilitated to know about corporations’ actions and intents in the society and environment it operates in. The corporation’s right to privacy means the corporation’s right to control the collection, use and disclosure of relevant and non-confidential information (Agrawal and Chadha, 2005). Process compliance and financial reports include filings and documents required by law, as well as those expected by creditors, local and international investors, staff, staff unions, donors, or board members. Much as the idea of transparency has been extensively studies in the financial sector, little attention has been focused on the pension sector which as mentioned is monopolized by NSSF in Uganda by virtue of the applicable laws. 13 2.2.2 Accountability Accountability is a remedy for manipulation and fraud. Raut (2014) posits that financial fraud, non-disclosure, and falsification of financial values in financial reports put users’ information at risk. Falsified, ambiguous and insufficient information hampers the ability of markets to function, causing an increase in capital cost and discouraging investment (OECD, 2011). To reduce these issues, it is the practice of most companies to contract independent, external auditors to audit the financial reports and to attach audit reports to the financial statements (Raut, 2014). The auditors must not be the management consultant for the same companies to avoid conflicts of interest and client pressure to appease management. Organizations should therefore put in place measures to verify financial reports and safeguard the financial reporting integrity. Companies with good accountability practices perform better than their counterparts in the stock market. Investors are interested in the process of value creation (Veldman, Gregor & Morrow, 2016). Good accountability practices include reporting on long-term value creation. Veldman, Gregor and Morrow (2016) state that companies with accurate reporting on long- term value creation and good environmental, social and governance performance (ESG) benefit from lower cost of capital as compared to their peers in the stock market. Corporate image seen and assessed by investors and stakeholders is shaped by how corporate activity is accounted for. Good accounting practices that involve reporting on long-term value creation should thus be a consideration for companies to boost their performance in the stock market. Awio, Lawrence and Northcote (2007) posit that accountability is concerned with giving explanations through a credible account of what happened, and a calculation and balancing of competing obligations. (“Out important operations in a way which minimizes the - Course Hero”) Accountability is defined in most cases and ranges more freely over time and space, focusing as much on future potential as on past accomplishment, connecting and consolidating performance reports to plans and forecasts. Accountability is concerned with giving explanations through a credible account of what happened, and a calculation and balancing of competing obligations, including moral and legal ones. Broadbent and Laughlin (2003) contend that the provision of more detailed information does not automatically lead to greater accountability. The variation in which entity or individual is accountable is dependent on the context and environment. 14 Barton (2006) portends accountability requires transparency and the provision of credible information that is consistent across the organization. The individuals responsible must walk the talk and act according to accountability guidelines. Cheffins (2009) proposed two aspects of accountability thus: public accountability, which involves the public as principals and is concerned with issues of democracy and public wellbeing; and trust, and managerial accountability that is concerned with day-to-day operations of the organization. With regards to managerial accountability the provision of detailed information is not directed to being more accountable to the public but that rather, it is an attempt by the principals to control the agents (managers) and legitimize past decisions and actions taken during operation. Therefore, Goddard (2005) revealed that greater accountability is often presumed to provide more visibility and transparency for organizational activity, enabling appropriate organizational behavior and ultimately impact on organizational performance. It is increasingly used in political discourse and policy documents because it conveys an image of transparency and trustworthiness. The context of NSSF provides accountability on two levels, to the individuals’ savings in the fund, and the larger public. The funds are invested in various investment avenues and members obtain a return on their contribution. Core, Holthausen and Larcker (1999) argues that an accounting system consists of business papers, records, reports, and procedures that are used by an organization in recording transactions and reporting their effects. Goddard (2005) argue that an accounting system, regardless of the size of the organization is designed to collect, process, and report periodic financial information about the entity. (“The Determinants of Computerized Accounting System on Accurate ...”) The information may however go beyond financial performance to operational, sustainability and environmental performance, among other factors. There is increased demand for other non-financial information provided that provides clarity on operations of an organization. Based on literature review, it is observed that the existing literature draws a lot of attention on accountability and financial performance of organizations in the NGO and banking sectors leaving scanty literature on the effect of accountability on organizational performance in the pension sector and more especially NSSF Uganda. This therefore informs the gap in literature which this study intends to bridge to provide information on the effect of accountability on organizational performance. 15 2.2.3 Equity Equity and equitable treatment in organizations attracts investors. Investors invest in companies that treat all shareholders equitably in terms of rights accorded to shareholders. Such rights include obtaining information about the company, registering their shares, selling their shares, electing members of the board of directors, and voting at shareholder meetings to influence the company (Aydamir, 2012). However, most companies have differential voting rights accorded to major shareholders. This enables them to maintain control with comparably little equity (OECD, 2011). As such, the interests of major shareholders may conflict with the interests of minor shareholders. For instance, majority shareholders may use their influence to obtain private benefits at the expense of minority shareholders. This derails the interests of prospective investors in the company and leads to lower valuations, difficulties in succession planning, and reduced access to equity finance. Organizations should therefore implement and enforce procedures for notifications of meetings and vote casting in a manner that participation is encouraged for all shareholders. Active board full participation is a big challenge faced by institutions across different sectors including pension. The research will explore the effect of board of directors' equity characteristics (age, gender, and education) on their ability to effectively undertake their roles. The study uses the agency theory to assess the relationship between directors' characteristics in terms of equity and boards' performance. The empirical analysis will be based on a questionnaire shared and filled with board members and senior management of NSSF Uganda. The study aims to assess the effect of directors' level of education, gender, and educational background. Over time, emphasis has been placed on board equity. As part of good corporate governance, the relationship between board equity and organization value has become one of the main topics explored in the related literature across Europe, Asia, Africa, and America. Existing empirical evidence has relayed varying results. While some authors find a positive relationship between equity and performance (Carter et al., 2010; Cook and Glass, 2015; Campbell and Minguez-Vera, 2008), some others find the opposite or no significant relationship (Zahra and Stanton, 1988; Rose, 2007; Shrader et al, 1997; Adams and Ferreira, 2009). The literature exploring the impact of board diversity on performance by and large refers to the board in its entirety or to its non-executive members. Legislative actions adopted until now 16 regard only non-executive directors, with the idea that their diversity could improve the monitoring ability of the board. However, whether equity of executive directors has an impact on firms’ performance has remained an unexplored empirical question, more so in the Pension sector. As far as the researcher’s examination, only a few authors have investigated the topic, mainly with reference to US listed firms. For example, Erhardt et al. (2003) study the relationship between gender and racial diversity of executive board members and some financial indicators of firm performance (return on assets and investment) for a sample of large US firms, finding a positive association. Khan and Vieito (2013) investigated whether the gender of the CEO matters in terms of firm performance and risk on a panel of US firms over the period 1992-2004 and found that firms risk level is smaller in firms with a female CEO. Other papers analyze the impact of diversity among top managers. For example, Dwyera et al. (2003) found that the impact of equity and gender diversity on performance depends on the organizational context and that gender diversity in management has positive effects in firms seeking growth. Smith et al. (2006), using data for the 2500 largest Danish firms during the period 1993-2001, found that the proportion of women in top management jobs tends to have positive effects on firm performance. Over the years, many researchers have focused on board and senior management equity and diversity, claiming both positive and negative effects on organization’s performance and governance. Most have correlated these effects with operational and financial performance. Heterogeneity refers to director education, experience, profession, gender, ethnicity, age. The most researchable aspects of equity and diversity are nationality and gender of directors, especially after the introduction of gender quotas in many European countries. As for nationality, several studies have examined the effects of minority representation on corporate performance. Zahra and Stanton (1988) examined how the percentage of ethnic minority directors affects several accounting measures of financial value, such as return on equity and earning per share, finding no statistically significant relationship. Rose (2007), analyzing a sample of listed Danish firms during the period of 1998–2001 in a cross-sectional analysis, does not find any significant link between firm performance as measured by Tobin’s Q and the proportion of foreigners. 17 Carter et al. (2010) explored the relationship between board diversity and firm value (as measured by Tobin’s Q) for Fortune 1000 firms, defining the former as the percentage of African Americans, Asians, Hispanic, and women on the board. They found that board diversity is associated with a significant improvement in financial performance. Masulis et al. (2012a) examine the benefits and costs associated with foreign independent directors at US corporations and find mixed results. From one side, firms with foreign independent directors make better cross-border acquisitions when the targets are from the home regions of these directors. (“Diverse boards: Why do firms get foreign nationals on their boards?”) On the other side, foreign directors display lower attendance rates and are associated with a greater likelihood of financial misreporting, higher CEO compensation, a lower sensitivity of CEO turnover to performance and poorer performance. Rose et al. (2013) study the impact of female board representation as well as citizenship on corporate performance, based on a sample of the largest listed firms in the Nordic countries as well as Germany. They found that board members with a background from common law have a significant positive influence on corporate performance measured as ROA, ROE, and ROCE. We will aim to explore the principle of equity in this study at NSSF Uganda. 2.2.4 Board Composition Age diversity is positively associated with organizational performance. Ferrero-Ferrero, Fernández-Izquierdo, and Muñoz-Torres (2015) examined the relationship between board diversity and performance of CSR. They studied 146 companies listed in Deutscher Aktienindex 30 (DAX 30), Financial Times Stock Exchange Index (FTSE IN) and Cotation Assistée en Continu 40 (CAC 40) in 2009. For the companies that had greater generational diversity, there was better CSR performance. Ferrero-Ferrero, Fernández-Izquierdo, and Muñoz-Torres (2015) argue that the reason for this trend is that generational diversity fosters innovation, formulation of effective design and strategies to address all financial aspects. This also enabled the firms to adopt sustainable approaches to business. Hiebl’s (2013) survey paper also shows that younger board directors are associated with innovative and control systems that are considered sophisticated. Mori (2014) surveyed 105 board directors of 63 financial institutions in Kenya, Uganda, and Tanzania to determine the relationship between board diversity and organizational performance. They found that age diversity was positively related to organizational performance. Younger board members are better at monitoring roles and 18 provision of resources within the board. However, Hiebl (2013) points out that the existing results on board characteristics are contradictory. Younger board members are preferable in turbulent market conditions whereas older members are preferable in maintaining the status quo in stable conditions. Gender diversity in the board helps to improve firm performance. In Ting, Azizan, and Kweh’s (2015) study of the 793 Malaysian companies, 98.1% of the CEOs and board directors were male. For the firms that had higher percentage of female heads and members of boards, performance was higher than those with males. Ting, Azizan, and Kweh (2015) therefore concluded that female executives and board members are greater risk takers than males. However, there are situations where presence of females on boards has no impact on firm performance. These situations include financial crises and a short period of time from female appointments to boards. Agyemang-Mintah and Schadewitz (2019) studied 63 financial firms in the UK over a 12-year period to determine whether presence of females on boards can influence firm value before and after a financial crisis. They found out that presence of females on boards was positively related to firm value pre-crisis but no effect post-crisis. Marinova, Plantenga, and Remery (2015) studied 186 firms listed in 2007 in Denmark and Netherlands to determine whether gender diversity has a positive relationship with organizational performance. 5.4% of boards were female whereas 40% of the listed firms had at least a female member in the board. The study utilized two-stage least square estimation to investigate this relationship. There was no relationship between gender diversity and organizational performance for the year 2007. There is progress in board gender diversity although balance has not yet been achieved. Huang, Diehl and Paterlini (2019) explored the influence of elite board members (people who are in multiple boards) on gender diversity in Germany. Their study was on 30 firms between 2010 and 2015. They found out that the presence of men in multiple boards was negatively related to participation of women. This suggests that men in multiple boards are reluctant to include women to maintain the monopoly brought by their elite status. On the other hand, presence of women in multiple boards is positively associated with gender diversity. However, men have a greater influence on board diversity, even if their numbers in the board is smaller to women’s. Racial diversity positively affects organizational performance. Zhang (2012) studied 475 Fortune 500 organizations that were publicly traded between 2007 and 2008 to determine the 19 link between board diversity and corporate social performance. He found that racial diversity in boards was positively related to the strength rating of the institutions. This implies that firms should foster racial diversity in their boards to improve their corporate social reputation. Firms with a higher percentage of racial minorities perform better politically than those with lower percentages. The independence of board members positively affects organizational performance. Leung, Richardson, and Jaggi (2014) studied board independence in family and non-family firms in Hong Kong. They found that there was a positive relationship between board independence and performance in non-family firms. However, family firms showed no association. This is because family firms have fewer independent directors (if none) whereas non-family firms have more independent directors. Fuzi, Halim and Julizaerma (2016) reviewed several empirical studies concerning board independence and its effect on organizational performance. Most of the studies revealed that board independence is positively associated with firm performance. However, other studies also revealed the contrary. Fuzi, Halim and Julizaerma (2016) argued that the reason for the contradiction lay in mediating factors such as office politics which jeopardized the performance of independent directors. Mediating variables greatly influence the relationship between board independence and firm performance. Other studies revealed unclear results. The level of education of board directors is positively associated with innovation. Chen (2014) studied the effect of board capital and the mediating factor of CEO authority on investment of Research and Development (R&D) under resource dependency. The study was based on electronic companies in Taiwan. Findings suggest that the education level of directors has a positive influence on R&D investment. R&D and innovation enables the company to improve performance and have an edge over competitors. Findings suggested that the level of education is positively related to organizational performance. 2.2.5 Research gaps The existing literature did not focus on the pension sector in the East African region which is an important part of formal structures that support society post working. In addition, much of the existing literature focuses on transparency and financial performance causing gaps in the literature on transparency and organizational performance in the financial sector and NGOs in developing countries where the procedures followed during transparency are still underdeveloped to support the organizational performance and growth. This explains why there 20 could still be lapses in organizational performance and how the information on nonperformance is relayed to the larger stakeholders interested in an institution’s performance. This literature deficiency provides a research gap which will be bridged by this study on the pension sector, and more specifically NSSF in Uganda. Further this study aims to contribute to the scarce literature on corporate governance of pension funds by documenting results on the evaluation of corporate governance to NSSF’s Uganda performance. Lastly, the study aimed to provide new and relevant insights into the current regulatory debate on the reforms of the pension fund in East Africa, arguing that the board composition, transparency, and accountability may be a way to improve corporate governance and, hence organizational performance. 2.3 Theoretical Literature 2.3.1 Agency Theory The Agency Theory was formulated by Mitnick (1976) and Ross (1973). They defined the theory as an interdependence or relationship between the principals and the agents. This relationship could be viewed as a contract between the agent and the principal. The agents are the parties that make decisions on behalf of the principals, being that the principals are not able to make the decision. Examples of agent-principal relationships are employer-employee, CEO- shareholders, ambassador-home state, among others. (Ross, 1973). Mitnick (1976) focused on the goal situation and the typology of the relationships in the agency. He emphasized the importance of identifying self-goals and other goals. Agents have their own goals and ambitions just like the principals do. How the firm performs is greatly influenced by the pursuit of goals. The principals’ goals are what inform the strategies that the firm take. If the agents pursue self- interests that are not in line with the principals’ goals, there’s a high likelihood that the goals of the company may not be achieved. It is therefore the principals’ problem to ensure that the agent pursues the principals’ goals (agent’s other goals) more than self-goals. The principal may ensure this by putting policies and frameworks to keep the agents motivated to pursue other goals. Mitnick (1976) identified problems that could affect the holistic application of the theory to organizations. It is difficult to know whether the agents’ behaviors stem from a mutually understood agreement between the agent and the principal. Following this, there’s a difficulty in knowing when a goal is “self” or “other”. The theory at best could be a framework to describe 21 principal-agent relationship in a simple organizational setting. This is because there is no mechanism to treat complex goals. Several studies have contributed to developing the agency theory framework. Pepper and Gore (2012) reviewed the conflict between self-goals and other-goals and its influence on organizational performance. This led to the development of behavioral agency theory as a framework for executive compensation. Pepper and Gore (2012) argue that the interests of principals and agents are more likely to be aligned if the agents are sufficiently motivated for optimal performance. The behavioral agency theory therefore places the performance of the agent at the core of the agency model. This contrasts with the standard agency theory where the core emphasis is incentive alignment and monitoring costs. Behavioral agency theory makes assumptions of inequity aversion, time discounting, trade-off between extrinsic and intrinsic motivation, and risk preferences. Bosse and Phillips (2016) identify one assumption in the standard agency theory model, for instance, narrow self-interest. They argue that the assumption should be changed to be in the confines of equity and reciprocity. This is because the perception of equity is a mediating variable that explains the results in prior research. Taking the mediating variable as a factor in determining agent motivation, organizations should improve social welfare to reduce goal conflict. African economies over the last 3 decades have largely been state-controlled showcased in the following: (1) The predominance of state-owned enterprises in all sectors of the economy; (2) the administrative control of interest rates and credit allocation to companies and various sectors of the economy; and (3) exchange rate controls. For many African countries, dictatorship by either military or civilian governments was the order of the day. The traditions of rule of law, transparency, accountability, and social justice, which underpin governance, both at the national and corporate levels, were non-existent. In State-owned Enterprises, the government appoints the directors or managers who make day-to-day decisions about the enterprise and exercise property rights. Through the directors the government made decisions regarding investment, production, procurement, and personnel matters. "As a regulator, the government sets technical standards of products, product prices and sometimes gives directives on cross-subsidization (Otobo, 2000)" (“Corporate Governance and State-owned Enterprises in Africa ... - Studocu”) Principal-agent relationship in NSSF Uganda can be taken as the relationship between the shareholders and the board of directors. The shareholders elect the directors of the board during 22 AGMs to represent their interests in NSSF Uganda. Potential directors are vetted rigorously in the ability to deliver positive results based on the collective shareholders’ goals. This ability is expressed through academic qualifications, career experiences, among other considerations. 2.3.2 The Modern Portfolio Theory The Modern Portfolio Theory (MPT) by Harry Markowitz (1952) refers to an investment theory that allows investors to assemble an asset portfolio that maximizes expected return for a given level of risk. The theory assumes that investors are risk-averse; for a given level of expected return, investors will always prefer the less risky portfolio. (“Modern Portfolio Theory (MPT) - Overview, Diversification”) Modern portfolio theory argues that an investment's risk and return characteristics should not be viewed alone but should be evaluated by how the investment affects the overall portfolio's performance and returns. (“Portfolio Optimization using MPT in Python - Analytics Vidhya”) Organizational performance on the other hand refers to a firm's market and financial performance (Slater and Narver, 1994). Previous studies acknowledge that firm performance is a complex and multi-dimensional construct (Carton and Hofer, 2005; Dvir et al., 1993) and it has been classified in many ways. (“Organizational Financial Performance: Identifying and Testing Multiple Dimensions”) Dvir et al. (1993) identified that firm performance may be reflected by financial outcomes, sales or market growth, customer satisfaction, or establishing a foundation upon which future growth may take place. According to the Modern Portfolio Theory, a portfolio frontier, also known as an efficient frontier, is a set of portfolios that maximizes expected returns for each level of standard deviation (risk). Figure 2.Illustration of the Modern Portfolio Theory, Harry Markowitz (1952) Many researchers have identified three main functions of financial performance management: as a primary objective of a business organization, as a tool of financial management and as a means of motivation and control. 23 The financial objectives of a for-profit business are closely related to the needs of the external suppliers of the company’s capital - shareholders. The main interest of shareholders are the rate of return on their capital which includes dividends and capital gains on the market value of their shares for a period divided by the share value at the start of a period. As earnings determine what can be paid out as dividends in the long run, shareholders, and their agents (such as investment analysts) are primarily concerned with financial measures like earnings, earnings per share (EPS), dividend yield, dividend cover and ROI. That is why the shareholders of the company seek to hold their managers accountable for the performance of the assets entrusted to them. External financial reports are intended to meet these needs. Also, financial performance management provides financial management with valuable information for planning, controlling, capital investment decisions, budgeting, and ratio analysis. The third major function of financial performance measurement lies in its internal use as a means of motivating and controlling the activities of managers so that they concentrate on increasing the overall value of the business or, at least, the value attributable to the shareholders. 2.3.3 Upper Echelons Theory Upper Echelons Theory (UET) was first proposed by Hambrick and Mason (1984). They opined that managerial characteristics such as tenure, age, education, functional background, financial position, and socioeconomic roots affect the outcomes of organizations. In making administrative decisions, the characteristics of the managers influence these decisions. Hambrick and Mason (1984) put much emphasis on managerial characteristics rather than psychological issues. This was because perceptions, values, and cognitive bases were not amenable to measure directly; upper-level managers are always hesitant to take part in psychological surveys; some characteristics such as functional background and tenure do not have related psychological analogs; and the application of UET perspective on selection of managers would require background information on the managers. Figure 1 below illustrates the perspective of the Upper Echelons Theory. 24 Figure 2. Illustration of the Upper Echelons Theory. Hambrick and Mason (1984). The horizontal arrow in Figure 1 above shows that the upper echelon characteristics are a result of the situations that the organizations face. It also shows that upper echelon characteristics determine the strategic choices that management makes, which in turn affect the performance of the organization. The situation, upper echelon characteristics, and strategic choices interact to influence the performance of organizations. The upper echelon characteristics described by Hambrick and Mason (1984) include: Age: The youth are associated with risk taking, fast learning, and volatility of earnings and sales. Older people are associated with less stamina, less likely to learn new ideas and behaviors, commitment to the status quo, and less risks. Therefore, companies with managerial youth will most likely pursue strategic risks such as innovation, financial leverage, and diversification. They will also experience greater variability and growth as compared to firms with older executives. Functional Track: Every manager brings to their organizations an orientation that has been developed through experience in a functional area. Functional track exerts influence on the strategic choices that the management makes. There is a positive relationship between throughput-function experience, output-function experience, and the extent to which firms emphasize throughput and outputs in their strategies. These will in turn be associated with growth and profitability. Other career experiences: Managers carry with them the experiences they have gained in their careers. Those who have stayed in one organization for the entirety of their careers are said to be limited in managerial perspectives. This is only beneficial to an organization in stable times. 25 Managers and executives from outside the firm tend to make more procedural, structural, and people changes than managers and executives from within the firm. This is because managers from outside desire to create loyalty, weaken the disloyal, and are less committed to the status quo. Promotion from outside is more likely in times of dismal performance. Formal Education: People educated in various fields have different perspectives related to those fields. The level of education informs receptiveness to innovation. This is despite the type of formal education. Firms with little formal education in management show greater variation in performance averages than firms with well-educated managers. Firms with well-educated managers in management exhibit administrative complexity as opposed to firms with little formal education in management. Socioeconomic Background: Firms with a high percentage of top management coming from lower backgrounds will tend to make strategies aimed at unrelated diversification and acquisitions. These firms will realize greater profit and growth variability than companies whose management is comprised of people from higher socioeconomic backgrounds. Financial Position: Profitability of the organization is related positively to the percentage of the organization’s income from which the managers get their dividends, salaries, options, and bonuses. Group Heterogeneity: Strategic decisions are made more quickly in homogeneous groups than in heterogeneous groups. However, team heterogeneity is positively associated with profitability in both stable and turbulent environments. Carpenter, Geletkanycz and Sanders (2004) proposed new frontiers in the development of UET model: universality of the TMT (top management team), exploration of the theoretical and practical meaning of the characteristics of TMT with respect to the constructs they represent, integration of other causes of managerial behavior into UET, and revisiting causality roles in the consequences, antecedents, and TMT compositions. Considering these possibilities, Abatecola and Cristofaro (2018) studied the developments in methodology and concept of studies that have adopted UET since 1984. Their aim was to provide an updated outlook on the approach of UET to strategic management. They found out that the developments of UET have reduced its assumptions on leadership over time to moderated co-evolutionary outlook. It is therefore possible to update the UET model to factor in co-evolutionary perspectives. The board of directors at NSSF Uganda is the upper echelons. Upper echelon characteristics at NSSF 26 include age, gender, race, level of education, board independence, and career experiences. The board of directors bring to the table the ability to make informed decisions based on these characteristics. It is the interest of this study to assess how these characteristics have affected performance. Source: Table 1: Summary of performance reviews - NSSF Annual report 2020 2.4 Conceptual Framework Development of the Conceptual Framework The conceptual framework was meticulously constructed through an extensive review of scholarly literature pertaining to the study variables. This rigorous examination of existing research served as the foundation for the framework's formulation. The primary objective of the conceptual framework is to visually illustrate the relationships and interactions among the variables under investigation. In this case, the independent variable is corporate governance, while organizational performance serves as the dependent variable. The framework provides a comprehensive overview of how corporate governance influences organizational performance, 27 focusing on key dimensions such as transparency, accountability, equity, and board composition. By synthesizing the insights gained from the literature review, the conceptual framework establishes a solid theoretical basis for the subsequent analysis. In terms of the independent and dependent variables, the conceptual framework focuses on corporate governance as the independent variable and organizational performance as the dependent variable. To enhance clarity and precision, specific indicators for corporate governance, such as transparency, accountability, equity, and board composition, need to be explicitly highlighted. For organizational performance, the identified determinants, including Customer Satisfaction Rate, Return on Assets and Investments (ROAI), Expense to Asset Ratio, Return on Members' Funds, Cost to Income Ratio, Asset Size, and Turnaround Time, should be explicitly connected to the dependent variable. This adjustment will provide a more granular understanding of the conceptual framework. Dependent variables key indicators Below are specific indicators for each of the corporate governance variables: Transparency: I. Disclosure Practices: The extent to which the organization openly shares information about its operations, financial performance, and decision-making processes. II. Accessibility of Budgets: How readily available and comprehensible the organization's budgets are for stakeholders. Accountability: I. Decision Responsibility: The organization's clarity in attributing decisions to specific individuals or groups within the governance structure. II. Compliance with Laws and Regulations: The organization's commitment to adhering to relevant laws, regulations, and ethical standards. Equity: I. Equal Opportunities: Ensuring that opportunities within the organization, such as employment and advancement, are accessible to individuals regardless of background or characteristics. II. Inclusive Decision-Making: The organization's efforts to include diverse perspectives in decision-making processes. 28 Board Composition: I. Diversity of Board Members: The representation of individuals with diverse backgrounds, skills, and experiences on the board. II. Competence of Board Members: Ensuring that board members possess the necessary skills and knowledge to effectively contribute to decision-making and oversight. These indicators provide a more specific and detailed understanding of how each aspect of corporate governance—transparency, accountability, equity, and board composition—can be assessed within an organizational context. Determinants of Organizational Performance Within the conceptual framework, special attention was given to the various determinants that contribute to organizational performance. These determinants encompass a range of metrics and indicators, including Customer Satisfaction Rate, Return on Assets, and Investments (ROAI), Expense to Asset Ratio, Return on Members' Funds, Cost to Income Ratio, Asset Size, and Turnaround Time. By examining these factors, the framework aimed to capture the multifaceted nature of organizational performance and provide a comprehensive understanding of its components. Through careful consideration of these determinants, the framework enabled the researcher to assess and evaluate organizational performance from a holistic perspective. Moderating Factors and Interrelationships The conceptual framework recognizes the influence of moderating factors on the relationship between corporate governance and organizational performance. These moderating factors include regulations, rules, and policies at both the national and organizational levels. By acknowledging the presence of these factors, the framework accounts for their potential impact on the relationship between the independent and dependent variables. The moderating variables, encompassing Country Laws, Regulations, and Company Policies, play a crucial role in influencing the strength and direction of the relationship between the dependent and independent variables. These moderating factors introduce contextual influences that can significantly impact organizational performance. For instance, notable alterations in the NSSF Act, such as adjustments in the percentage of employee salary remitted to NSSF Uganda, have the potential to exert a substantial effect on the overall performance of the organization. Furthermore, the existing policies governing investments within the fund can also exert a significant influence on its performance. As a result, these moderating variables will be closely 29 monitored to assess their impact on the relationship between corporate governance and organizational performance. The relationship with the independent variables is highlighted as: Country Laws: The regulatory landscape established by country laws has a significant impact on the relationship between the independent variables (transparency, accountability, equity, and board composition) and organizational performance. Stringent legal frameworks can enhance adherence to governance principles, providing a structured environment that positively influences the organizational outcomes. Conversely, lax or ambiguous legal standards may pose challenges, affecting the effectiveness of governance practices and, subsequently, organizational performance. Regulations: Specific industry or sector regulations act as a crucial moderating factor, shaping the dynamics between corporate governance elements and organizational performance. Regulations that explicitly endorse and enforce transparency, accountability, equity, and a balanced board composition contribute to a more robust governance framework, fostering positive organizational outcomes. Conversely, regulatory gaps or inconsistencies may weaken the impact of governance practices, hindering optimal organizational performance. Company Policies: Internal company policies serve as a direct and immediate influencer of the relationship between transparency, accountability, equity, board composition, and organizational performance. Well-crafted and effectively implemented policies aligning with governance principles can reinforce positive outcomes. On the contrary, poorly defined or inadequately enforced company policies may compromise the efficacy of governance practices, potentially leading to suboptimal organizational performance. Overall Influence: Collectively, the interplay between country laws, regulations, and company policies plays a pivotal role in shaping the relationship between independent variables (governance elements) and the dependent variable (organizational performance). A harmonious alignment between legal frameworks, industry regulations, and internal policies strengthens governance practices, fostering a conducive environment for optimal organizational performance. In contrast, disparities or inconsistencies among these moderating factors may introduce challenges, impacting the desired positive correlation between governance practices and organizational outcomes. 30 Moreover, Figure 3 in the framework visually depicts the interrelationships among the dependent variables (e.g., Customer Satisfaction Rate, ROAI, Expense to Asset Ratio, etc.), independent variables (e.g., Transparency, Accountability, Fairness, Board Composition), and moderating variables (e.g., Country Laws, Regulations, Company Policies). This visual representation aids in providing a clear overview of the complex dynamics and interactions among the variables, enhancing the understanding of the conceptual framework's structure and theoretical implications. In summary, the conceptual framework, developed through a comprehensive literature review, provides a theoretical framework for examining the relationship between corporate governance and organizational performance. It incorporates determinants of organizational performance and acknowledges the influence of moderating factors. By visualizing the interrelationships among the variables, the framework offers a structured and comprehensive perspective on the research area, enabling further analysis and empirical investigation. Independent variable Dependent variable Figure 3. Conceptual Framework Illustrating the Relationship between Corporate Governance and Organizational Performance. 31 2.5 Recap of literature review This chapter provides a comprehensive review of the literature pertaining to the study objectives. Specifically, the literature review focuses on exploring the impact of corporate governance on organizational performance. The findings of the literature review indicate that transparency plays a crucial role in financial institutions, both in the public and private sectors. While developed countries have made significant progress in implementing transparency measures, institutions in developing countries are still in the early stages of adoption. Moreover, the literature reveals a positive relationship between accountability and organizational performance, highlighting the importance of fostering a culture of accountability within institutions. The presence of effective accountability mechanisms has been found to enhance organizational performance. Additionally, the review establishes that board composition has a significant influence on organizational performance. The evidence suggests that a well-composed and independent board or committee positively contributes to the performance of the organization. In conclusion, this literature review underscores the need to comprehend the impact of corporate governance on institutional performance. To cultivate a high-performing organization with robust governance structures, it is crucial to explore how corporate governance practices influence organizational performance. 32 2.6 Research gaps. This section provides a comprehensive review of the literature pertaining to the study objectives. The existing literature failed to address the pension sector in the East African region, a crucial component of societal support post-employment. Moreover, the prevalent literature primarily concentrated on transparency and financial performance, leaving gaps in understanding transparency's role in organizational performance, particularly in the financial sector and NGOs of developing countries where transparency procedures were still evolving. This knowledge deficit elucidated potential gaps in organizational performance and the communication of nonperformance information to stakeholders. The study, which focused on the pension sector and specifically NSSF in Uganda, aimed to bridge this gap. Additionally, the study aimed to contribute to the sparse literature on the corporate governance of pension funds by evaluating its impact on NSSF Uganda's performance. Lastly, the research aspired to offer novel insights into the ongoing regulatory discourse on East African pension fund reforms, positing that board composition, transparency, and accountability could enhance corporate governance and, consequently, organizational performance. These gaps in the existing literature provided a compelling rationale for undertaking this research. 33 CHAPTER THREE: RESEARCH METHODOLOGY 3.1 Introduction This chapter discussed how the study was conducted to achieve the research objectives. It focused on the research methodology, research design, location of the study, target population, sampling procedures and techniques, sample population, construction of research instruments, testing for validity and reliability, data collection methods and procedures, proposed data analysis techniques and procedures, and the ethical considerations. 3.2 Research methodology Research methodology is the process used to collect data for the purpose of making sound and informed business decisions. To satisfy the objectives of the research, the researcher intends to apply a mixed research design (qualitative and quantitative research). In specific the Convergent Parallel Design. The researcher aimed to collect quantitative and qualitative data concurrently, analyzed the two data sets, and obtained an interpretation. A more complete understanding was derived from two databases, and results were corroborated from different sources. The purpose of this design was "to obtain different but complementary data on the same topic" (Morse, 1991, p. 122) to best understand the research problem. The intent in using this design was to bring together the differing strengths and nonoverlapping weaknesses of quantitative methods (large sample size, trends, generalization) with those of qualitative methods (small N, details, in-depth) (Patton, 1990). The results of the questionnaire (closed and open-ended) findings were analyzed to make objective inferences. Correlation analysis was applied to assess the correlation coefficient of different study variables. Correlation analysis was utilized to assess the correlation coefficient among various study variables, facilitating objective inferences from closed and open-ended questionnaire findings. The online questionnaire, encompassing both open-ended and closed-ended questions, was strategically structured, commencing with basic demographic information and progressing from simple to complex inquiries. 3.3 Research design Research design is the framework for which all the issues associated with planning and implementation of a project are described and clearly defined (Punch, 2012). The researcher used correlational design which examines the relationship between two or more variables 34 without manipulating them. It assesses the degree of association or correlation between variables. Therefore, the researcher applied mixed research (qualitative and quantitative research). This involved use of questionnaires (with closed-ended s and open-ended questions). The steps taken in conducting the study included determining whether a mixed method was feasible, identifying a rationale for the method, identifying a data collection strategy and design type, and developing quantitative and qualitative questions. The researcher then aimed to collect the data, analyze it, and use it for the evaluation. 3.4 Locations of the study The study was conducted at the National Social Security Fund (NSSF) headquarters, located at Workers House on Plot 1, Pilkington Road in Kampala, Uganda. Workers House is a prominent commercial building situated in the central business district of Kampala. The headquarters served as the central administrative hub and operational center of NSSF, which is the primary pension fund provider in Uganda. 3.5 Target population The target population for this study was the entire staff of NSSF Uganda. There were currently 566 staff members of NSSF Uganda as of 30 June 2020 as per the annual report. Below is a tabulation of the target population. Respondent classification Population Board members 7 Executive management 12 Branch Managers 18 Relationship Managers 45 Team members 484 Total 566 Table 2: Summary of staff at NSSF Uganda as per NSSF annual report 2020 3.6 Sampling procedures and techniques The study adopted a correlational design which examined the relationship between two or more variables without manipulating them. A mixed sampling method incorporating homogeneous 35 sampling and simple random sampling was used. Homogeneous sampling was a type of purposive sampling where all the members under scrutiny were similar, such as in occupation or hierarchy level (Saunders, Lewis, and Thornhill, 2012). Simple random sampling was a method where every possible sample had an equal chance of selection (Hesse & Ofosu, 2017). Homogeneous sampling was used for both the board of directors and the executive committee, while simple random sampling was used for other staff members. The sample size was obtained from the table generated by Krecjie and Morgan (1970). A sample size represented a portion of the population, and the selection involved the process of choosing the elements from the population (Amin, 2005). Given that the study population was large at the staff level, homogeneous sampling was used for the board of directors and the executive management committee, while simple random sampling was used for other staff members. The sample size was obtained from the table generated by Krecjie and Morgan (1970). The details are highlighted in the table below. Respondent classification Population Sample Sampling technique Executive Management 19 10 Purposive (homogeneous) sampling Branch Managers 18 5 Simple random sampling Relationship Managers 45 18 Simple random sampling Team members 484 67 Simple random sampling Total 566 100 17% of the population is sampled Source: NSSF Annual report 2020 The researcher intended to select 17% of the sample which included 100 personnel at all carders of the organization. 100 personnel are a reasonable representative of the population and build an adequate sample to assess and produce credible results. While the researcher acknowledges that simple random sampling may not be the most tailored approach for the specific category of the target population, the researcher believes it still has its merits. Simple random sampling allows for equal probability of selection and minimizes potential bias, providing a representative sample from the larger population. In this study, it allowed the researcher to maintain objectivity and generalizability of findings. In this research, the use of purposive sampling for the selection of executive managers was justified based on several factors. Purposive sampling/judgmental or selective sampling 36 allowed for the intentional selection of participants who possess specific characteristics or expertise relevant to the research objectives. The researcher had to also align with NSSF Uganda executive managers availability and willingness to participate in research studies influenced by various factors, such as time constraints and organizational responsibilities. Purposive sampling enabled the researcher to strategically identify executive managers who were willing and able to contribute to the study as part of the NDA the researcher signed with NSSF Uganda. It is important to note that while purposive sampling allowed for targeted selection, we took precautions to ensure that the process remained transparent and objective. This approach enhanced the validity and relevance of our findings within the context of executive management in NSSF Uganda. 3.7 Sample population Under homogeneous sampling, 9 board of directors and 12 members of the executive committee were considered for the study. Under simple random sampling, 18 branch managers, 45 relationship 484 staff members were chosen for the study. 3.8 Construction of research instruments The online questions used were both open-ended and closed-ended. Basic information pertinent to the study was included at the beginning of the questionnaires, such as age and gender. The order of questions proceeded from simple and easy to complex. Respondents were then asked if they had any other concerns before being thanked. To maximize response rates, the researcher considered the use of a covering letter for the questionnaire. The covering letter was short and explained the research in a clear and understandable way. Data was sorted anonymously, and information on the accessibility to third parties of results was provided following completion of the work. Furthermore, the researcher developed an interview guide to collect primary qualitative data from the sampled population that was interviewed. In addition, secondary data was obtained from NSSF Uganda's annual reports, focusing on the trend in the diffe